The Effect of Macroeconomic Uncertainty on Household Spending
American Economic Review
vol. 114,
no. 3, March 2024
(pp. 645-77)
Abstract
We use randomized treatments that provide different types of information about the first and/or second moments of future economic growth to generate exogenous changes in the perceived macroeconomic uncertainty of treated households. The effects on their spending decisions relative to an untreated control group are measured in follow-up surveys. Our results indicate that, after taking into account first moments, higher macroeconomic uncertainty induces households to significantly and persistently reduce their total monthly spending in subsequent months. Changes in spending are broad based across spending categories and apply to larger durable good purchases as well.Citation
Coibion, Olivier, Dimitris Georgarakos, Yuriy Gorodnichenko, Geoff Kenny, and Michael Weber. 2024. "The Effect of Macroeconomic Uncertainty on Household Spending." American Economic Review, 114 (3): 645-77. DOI: 10.1257/aer.20221167Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D84 Expectations; Speculations
- E21 Macroeconomics: Consumption; Saving; Wealth
- E23 Macroeconomics: Production
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth